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Global Markets: European stocks slump to 2-year low after China exec arrest

Reuters  |  LONDON 

By Marc Jones

(Reuters) - Global stock markets slumped for a third day running on Thursday as the arrest of a top of Chinese tech giant in for extradition to the fed fears of fresh tensions between the two economic superpowers.

The arrest of Huawei's Meng Wanzhouof, who is also the daughter of the firm's founder, triggered renewed fireworks coming just as and prepare for crucial trade negotiations.

Asian markets took a beating. is not listed but China's second-largest sank 9 percent in Hong Kong while most of the nearby national bourses lost at least 2 percent.

slumped too in early trading as 3 percent falls for the tech sector, miners and also carmakers kicked London, and to two-year lows.

"We had this very ugly new turn and just the degree to which the market has reacted just suggests to me that they are vulnerable right now," said Saxo Bank's of FX strategy

"It think we should all be very careful, it is not looking good, especially if the S&P 500 goes to new lows."

Hardy said that U.S. may try to send some reassuring tweets later. For the time being though S&P 500 futures were down almost 2 percent.

The losses might have been even steeper had CME Group's not implemented a series of 10-second trading halts in that had limited the initial drop.

Japan's Nikkei shed 1.9 percent, closing at its lowest level since Oct. 30, with related shares leading the losses. is one of the world's largest makers of and

MSCI's ex-Asia-Pacific index lost 2.0 percent too. Hong Kong's Hang Seng dropped 2.5 percent while Chinese bluechips lost 2.1 percent to take their 2018 slump to 20 percent.


Saxo Bank's Hardy highlighted that the Australian dollar, which is highly sensitive to trade tensions due to huge Aussie metals sales to China, had failed to lift after some reassuring comments from on the trade discussions.

0.6 percent against the U.S. dollar to $0.7229. The greenback itself fell as much 0.4 percent against the yen to 112.77 yen as it suffered slightly too.

The yuan eased 0.3 percent to 6.8835 per dollar in offshore trade, the euro barely budged at $1.1338 and the Canadian dollar languished near the 18-month low it had hit the previous day after cautious noises from the

On the Huawei drama, Canadian authorities had said they had arrested the firm's in

China's foreign ministry said neither and the had clarified their reason for the move but a source had earlier told it was related to violations of U.S. sanctions on

The arrest heightened the sense of a major collision between the world's two largest economic powers not just over tariffs but also over technological hegemony.

Britain's said it was removing Huawei's equipment from the core of its existing and 4G mobile operations. and have also rejected Huawei's products.

"The U.S. has been telling its allies not to use Huawei products for security reasons and is likely to continue to put pressure on its allies," said Norihiro Fujito, at

"So while there was a brief moment of optimism after the weekend U.S.-talks but the reality is, it won't be that easy," he said.


Traders were also waiting to hear from about what kind of cuts and other like could make to their output.

Consensus among analysts is for somewhere between 1-1.3 million barrels per day, and Brent dived back below $60 a barrel as Saudi Arabia's minister said going into the day long meeting that 1 million "would be enough"

Yields on top-rated bonds held near six-month lows in risk off environment, while those on benchmark 10-year U.S. Treasuries were near a three-month low at 2.886 percent.

Adding to worries about U.S. recession risks, the Treasury yield curve remained inverted between two- and five-year zones, with five-year notes yielding 2.763 percent, below 2.778 percent on two-year notes.

U.S. jobs data is due on Friday. If the figures show any sign of serious weakness, markets are likely to react HSBC's of macro economic strategy, Shuji Shirota, said.

(Reporting by Marc Jones; Editing by Toby Chopra)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, December 06 2018. 16:18 IST